May 19 2016

elb2Rounding out the brief review of the year, after the Winners yesterday, today in Premium: 2016 Year In Exchange Invest: Losers. I take no satisfaction in those who have proven so lacklustre (at best) in the past year. Rather, the tragedy is that all the losers seem oblivious to their failings and that deeply concerns me given the weight of criticism they have consistently received from the Exchange Invest readership. If you aren’t reading Exchange Invest Premium, you’re behind the ball – only $300 per user/year separates you from being informed …and it helps support the free newsletter. Discounts for bulk and corporate offers, email for details.

Good news for GMEX today, Avenir installed to service Warehouse Receipts at ACE while MIFID II gets a one year delay and the pressure remains on to alleviate clearing clashes across the Atlantic. Meanwhile waterfall issues are reaching India where exchanges are facing a monsoon of capital shuffling to enhance clearing house capital probity. Bizarre news of the day is TMX backed BOX opening a floor for options trading. Strikes me as the hipster retro look for exchanges.

Public Markets

EU MiFID II Market-Rule Revamp Advances With Equity-Market Rules

Julia-Ambra Verlaine – Bloomberg

The EU took a step closer to completing the overhaul of market rules known as MiFID II as the bloc’s executive arm adopted technical standards on equity markets.

The so-called delegated act adopted on Wednesday by the EC sets out definitions of liquid markets for equity instruments. It follows two previous acts on how banks distribute research to clients and HFT.


European Council: Markets In Financial Instruments: Council Confirms Agreement On One-Year Delay


On 18 May 2016, the Permanent Representatives Committee (Coreper) approved, on behalf of the Council, an agreement with the European Parliament on a one-year delay to new securities market rules.


Clearers Strive To Solve The Collateral Challenge (subscription)

Tim Cave & James Rundle – Financial News

Ever since the financial crisis, when it seemed like any firm could blow up at any moment, regulators have insisted on one thing more than anything else: insurance against it happening again.


Fixing Rule Clashes On Derivatives & Capital Is EU Priority (subscription)

Tim Cave – Financial News

Reducing conflicts between new derivatives and capital requirement rules – as well as lowering reporting burdens for asset managers – are among the issues the EC wants to address as part of its sweeping review of post-crisis reforms.


India – Bourses May Need To Transfer A Quarter Of Profits To Clearing Houses

Ashish Rukhaiyar – The Hindu

The decision is expected to be announced on Thursday when the board of the capital market regulator is scheduled to meet in Mumbai.

Private Markets

Sydney SE’s Blockchain System Targets VC Funds, Commodities

Shaun Drummond – SMH

Two-year-old Sydney SE (SSX) is building a blockchain settlement system to avoid high ASX fees, build a market for venture capital funds to exit their investments and facilitate commodities markets. The distributed ledger will initially only be used to settle trades in private companies, but once regulatory approval is gained, it will settle trades in publicly listed stocks.

SSX will promote the new settlement system as a low cost alternative to the ASX to try to attract private equity funds to exit their investments by listing on the SSX.

QV Premium: ASX Monopoly – Brief – Part 3.

PLY: Cool, it’s entirely logical and been on the cards for some time in various scenarios, good move by SSX.


NCDEX Starts Deposits In Silos, Savings For Depositors

The Economic Times

NCDEX has started accepting wheat deposits in silo bulk storage facility. Farmers and traders can now directly bring their loose produce to NCDEX approved silos and save on bagging and handling costs. NCDEX is the only exchange in India to offer deposits in silo storage systems.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX and FTIL flat to small off.


GMEX Avenir Warehouse Receipt System Goes Live At The Agricultural Commodity Exchange For Africa


PLY: Following the deal signed last April, it’s great to see Stuart Turner’s Avenir project being implemented via their shareholder GMEX. Good purchase by ACE CEO Kristian Schach Moller too.


NYSE – Technical Issue Resolved


Issue Resolved At NYSE, Some Orders Canceled


NYSE said on Wednesday a critical technical issue that disrupted trading in nearly 200 ticker symbols had been resolved.

NYSE said in a statement that “trading has resumed in those symbols at 1:17 p.m. ET (1717 GMT) and all systems are now operating normally.” Nasdaq and Bats declared “self-help” against the NYSE.


A New Trading Floor in 2016? Options Market Turns to Old Tactic

Brian Louis – Bloomberg

BOX Options Exchange, which operates an electronic trading venue, plans to add open-outcry trading in Chicago later this year, according to CEO Edward Boyle. The proposal requires regulatory approval.

PLY: Hmm, Back to the Future? Years ago back in the days when Canada was going progressive with its exchanges (well Quebec was, anyway), I was the expert witness to Bourse de Montreal arguing (successfully) in the case that floors were redundant. I cannot see any coherently profitable logic in a new floor and it kind of stands as a testament to what is a growing body of evidence that TMX CEO Lou Eccleston is simply out of his depth as CEO (QV TMX were within a whisker of being an EI “Loser of 2016” – had we had this data when judging…who knows).

Career Paths

CME AGM 2016 prelim results:

– Shareholders elected Terrence A. Duffy, Phupinder S. Gill, Timothy S. Bitsberger, Charles P. Carey, Dennis H. Chookaszian, Ana Dutra, Martin J. Gepsman, Larry G. Gerdes, Daniel R. Glickman, Leo Melamed, William P. Miller II, James E. Oliff, Alex J. Pollock, John F. Sandner, Terry L. Savage, William R. Shepard and Dennis A. Suskind each for a one-year term expiring in 2017;

– Class B-1 shareholders elected Jeffrey M. Bernacchi, William W. Hobert and Howard J. Siegel for one-year terms, Class B-2 shareholders elected Ronald A. Pankau and David J. Wescott for one-year terms and Class B-3 shareholders elected Elizabeth A. Cook for a one-year term, each ending in 2017.

PLY: Congratulations to all parties re-elected.

Liquidnet announced that Dirk Griesmeyer has joined the company as Sales Director covering German institutions. Griesmeyer joins from BAML where he spent ten years as MD of the German Equity Sales Trading team.

PLY: Liquidnet Europe have been pushing continental marketing for several years but seem to have an issue retaining their marketing people there…

Axioma appointed Ian Webster as COO, a newly created position. Webster was previously Chief of Staff since January 2016. He joined Axioma as MD, EMEA in 2011.

LSE Shifts Shared Services To Sri Lanka


LSE will hire up to 400 highly skilled Sri Lankans as it has decided to shift part of its technology and business functions here. The new company to be formed under the name of London Stock Exchange Business Services Colombo limited is currently looking at high end tech and biz skills required for capital markets.

PLY: Extending the Millennium homeland connection with competent but cheaper techies qv similar arrangements where DB1 moved from Frankfurt to Prague etc.

Financial Calendar

19.05 – Record date ENX €1.24 yearly gross dividend

19.05 – Record date Thomson Reuters $0.34 quarterly dividend

19.05 – Tullett Prebon 11.25p final 2015 dividend payment

20.05 – ENX €1.24 yearly gross dividend payment

20.05 – NZX AGM

All forthcoming exchange / investment related events are now listed in our Events page.


N.Y. Regulator Subpoenas Lending Club Over Interest Rates, Fees

Suzanne Barlyn – Reuters

The New York Department of Financial Services (NYDFS) subpoenaed San-Francisco based Lending Club asking for information about loans it issued to New Yorkers since May 17, 2013, such as underwriting standards and how Lending Club verifies borrower information.

PLY: A worrying continuation of consequences from a dumb CEO act…

Other stories

JPMorgan, Citigroup Sued In London By Two Currency Traders

Patrick Gower – Bloomberg

Patrice Ktorza, an executive director in FX sales who left JPMorgan in August, is suing the bank for unfair dismissal over pay and sexual discrimination.

PLY: In this parish watch DB1 – I fear what appear to be repeated management failings may yet result in various lawsuits from disgruntled staff.


Opening Remarks By SEC Chairman Mary Jo White Before The SEC Advisory Committee On Small & Emerging Companies



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